The Striking Price

Investors Should Rely on Prudence, Not the Fed

Most of the time, placing faith in the "Fed put" is a dangerous exercise in futility.

The market has long envisioned a mythical savior: Using a cash-laden helicopter, his beard billowing in the breeze, the Federal Reserve chair swoops down to rescue the market at the slightest whiff of trouble by tossing money at it.

The savior scenario has become so widely accepted that it's common to hear investors mention the "Fed put" (aka the "Bernanke put" or the "Greenspan put") as a reason why...